Measures unlikely to give quick boost

Housing Business Association president Prasong Olarn said that although the government had approved the measures, they would only start to become effective in the second half of the year.

Moreover, before home-buyers decide to purchase, they will have to be confident in their future earnings, he said.

However, the tax measures will have a positive effect on the market for homes priced between Bt3 million and Bt6 million, which covers 90 per cent of residential projects in the market.

"If home-buyers decide to purchase following the tax measures, it will help the market this year nearly achieve last year's level of sales. This is better than the previous estimate that the property market will drop this year, after facing a hard time in the final quarter of last year," Prasong said.

Thai Condominium Association president Atip Bichanond said the property tax measures, which increase the tax allowance for principal payments to Bt300,000 and for interest payments to Bt100,000, were further positive news for the market this year following the reductions in interest rates, oil prices and inflation.

However, the measures will have less impact than intended on potential home-buyers, who continue to be concerned about their future earnings possibly falling as economic growth slows sharply this year.

As a result, property firms will have to be strict about their investment plans this year by changing their business policy from ready-to-occupy homes to sales before building, as this will save on costs and enable them to maintain cash flow, Atip said.

Meanwhile, developers have to manage their businesses by closely watching what their competitors are doing and being disciplined about launching only projects that truly match demand, he added.

"In my view, property business will continue to drop in the first half of this year, but will recover in the second half. That will maintain business at nearly last year's level, which recorded sales of almost 70,000 units," he said.

Thai Condominium Association adviser Manop Pongsatad said the government's property measures would not have the intended impact in getting people to buy.

Normally, home-buyers will take between one and two years before making a decision to buy. The government has launched property tax measures that will start to have a positive impact on the market only in the second half of this year.

As a result, the market will continue to face a tough time in the first half, which may see sales drop by nearly the same amount as last year's final quarter, which recorded sales dropping by between 5 and 10 per cent year on year, he said.

Leartmongkol Varavanuch, director of the Thai Real Estate Association, said property firms would face lower margins this year because almost all of them would experience higher costs for land, as well as spending more on marketing following increased competition.